"Tom" wrote:

- quote -

That's what it says.

- quote -

No, not "likely," absolutely.

NYS doesn't tax 529 distributions whether or not they were used for
qualified expenses. You'll go crazy if you try to find the "why" lying
beneath every tax law provision.
--
Phil Marti
Clarksburg, MD

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"Phil Marti" <prm20871[at]verizon.net> wrote in message
news:1lpml.1002$hm.542[at]nwrddc02.gnilink.net...
- quote -


The NYS instructions say:
"If you made a withdrawal and part of the withdrawal was included in your
federal AGI on line 21 of federal Form 1040, then enter that amount on line
2 of the worksheet below" (that amount is then subtracted from your AGI)

To me that says that if you made a distribution for an unqualified expense
and had to pay tax on it, then you can deduct it from your NYS AGI.
Apparently NYS doesn't care if expenses are qualified or not?! Not likely,
but I don't know what else it means.

TaxCut says:
"Enter the amount of qualified withdrawals you made in 2008 from a New
York's 529 college program if you included this amount on your 2008 Federal
Return"

This makes no sense to me, since qualified withdrawals aren't included on
the Federal Return; so this is pointless entry.


So, obviously I am still confused. Any guidance here? At this point it is
pure curiosity, since I didn't include any withdrawal on my federal return.

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Tom" <Tom[at]cppc.com> wrote:

- quote -

Read it again. You won't find any mention of "qualified" distributions.
There are distributions, and there are qualified expenses. In some cases
part of the distribution is taxable income and winds up on the student's
1040. It appears this is the NYS adjustment you're looking at. If none of
his distributions was taxable on the Federal return there's nothing to
adjust on his state return.

--
Phil Marti
Clarksburg, MD

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

I just posted:
"My son paid for college with distributions from his NYS 529 plan.
He had income of $30,000, took $40,000 out of his 529 plan; so his New York
AGI is -$10,000? Can that possibly be right? It seems way too good to be
true."

Well, I reread it and find that I am wrong, but still confused.

You don't adjust the distribution, you deduct the qualified distribution
that included on your federal return.
But why would you include a qualified distribution on your federal return?
I have to be missing something here, but I don't know what it is. I have
read the IRS Pub 970 on 529s, and it seems pretty straight forward, but NYS
wouldn't have included the adjustment if it was never used. So when would
it be used?

Sorry about making the first post too fast.

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >